How can we anticipate the proportion of a newly imposed unit excise tax that consumers will pay?
A) Consumers will pay most of the tax whenever their demand for a product is relatively unresponsive to price changes.
B) Consumers will always pay 100 percent of an excise tax.
C) Consumers will pay most of the tax whenever their demand for the product is very price sensitive.
D) Since producers always pay 100 percent of an excise tax, we know consumers will not pay any of the tax.
Answer: A
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What will be an ideal response?
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